Testing the resource curse hypothesis: The dynamic roles of institutional quality, inflation and growth for Dragon

ShiYong Zheng, Hua Liu, Muhammad Hafeez, Xiaofeng Wang, Shah Fahad and Xiaoguang Yue

Resources Policy, 2023, vol. 85, issue PA

Abstract: In the recent time period, we have observed a great deal of interest from different stakeholders to discuss regarding the credibility of the resource curse/blessing assumption for so many obvious reasons, including that economies and policy practitioners are eager to reap the benefits of natural resources to increase economic prosperity. On the same lines, this analysis confabulate the credibility of resource curse assumption in presence of two most prominent economic indicators, institutional quality and inflation, which are essentially interconnected with financial development in developing nations. Our present analysis is grounded upon a developing economy - China - and will serve as a stepping stone for the similar economies. The time period we have considered for empirical estimation is from 1990 to 2020. The empirical analysis, after estimations elucidates that in the far off time frame, natural resources are adversely interconnected with financial growth, i.e., resource course hypothesis is proved. However, quality of government is favorably associated with financial development and inflation is hampering the financial development. Thus, policymakers should adapt those polices which discourage the over utilization and exploitation of natural resources and also to encourage the political reliability and fiscal decentralization in the Chinese economy also bring a positive increase in financial development.

Keywords: Resource curse; Institutional quality; Inflation; QARDL (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:85:y:2023:i:pa:s0301420723005512

DOI: 10.1016/j.resourpol.2023.103840

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